pension program overview (indonesia) · accrual rate 2.50% for each year of service 5.70% maximum:...
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Pension Program Overview (Indonesia)
by:
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CONTENT
Transformation to BPJS
Current Pension Scheme
SS Pension Projection
SJSN Pension Scheme
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Roles of Labor Union
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Indonesia Soc Security Transformation RoadMap
SJSN Rep Act No. 40.2004
BPJS Rep Act Num 24/2011
Establishment of:
- BPJS Kesehatan (former PT. Askes)
- BPJS Ketenagakerjaan (former PT Jamsostek)
Program Implementation of BPJS Ketenagakerjaan
Incorporation of PT. Taspen & PT. Asabri into SJSN
2004
2011
Jan 1. 2014
Jul 1. 2015
2029
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SJSN = National Social Security System BPJS = Social Security Institution
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Transformation to BPJS
Current SS Pension Scheme
SS Pension Projection
SJSN Pension Scheme
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Roles of Labor Union
CONTENT
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Mandatory Social Pension
Civil Servant
Police & Military
Private Formal & Informal Sector
Indonesia Pension Pillars
Private Formal Sector & Individual
Funded DB Voluntary Occupational
Private Pension DC
Employer Pension Fund
Financial Institution Pension Fund
PAYG DB
Funded DB
PT. Taspen
PT. Asabri
BPJS Ketenagakerjaan
Mandatory Old-Age Saving
Private Formal Sector & Individual
DC PT. Jamsostek
Voluntary Individual Saving
Individual DC Financial
Institution
Scheme Member Financing Adminstrator
Current Condition
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Benefits for Current Programs
Specifications Civil Service Pension Jamsostek’s Old Age Savings
Private Pensions Mandatory Termination Allowance
BENEFITS
Normal Retirement Age 56 or age 50 with 20 years of service
55 or 5 years of contributions of termination
Mostly : 55 , maximum 60
As per prevailing law
FORMULA (% of Pensionable wages)
Pensionable wages
Basic salary plus family allowance
Accrual rate 2.50% for each year of service
5.70% Maximum: DB: 2.50%/year; DC: 20%/year
Maximum 75% of basic salary N.A DB: 80%; DC: 20% /year
Benefit payment mode
Annuity benefit for life
Lump sum payment of Accumulated contributions plus the declared rate of return on account balances and contributions
20% lump sum, 80% monthly pension for life
Lump sum – benefit varies by years of services
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Specifications Civil Service Pension Jamsostek’s Old Age Savings
Private Pensions Mandatory Termination Allowance
CONTRIBUTIONS
Employee 4.75% Formal: 2% Informal : 2% of income (“income” set up at minimum wage level of IDR 1 million / month)
Maximum: 60% of employer’s contributions The total contributions in a year shall not exceed 20% of pension base earnings
None
Employer Paygo, varies on actual expenditure
Formal sector worker: 3.70% Informal sector worker: None
DB: pay monthly/annually, depend on actuarial valuation DC: as set out in the EPF/FIPF regulation
PAYG, paid full by employer
Contribution for Current Programs
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Issues
Mandatory Social Pension
Funded DB Voluntary Occupational
Private Pension DC
PAYG DB
Funded DB
Mandatory Old-Age Saving
DC
Voluntary Individual Saving
DC
Past Service Liability
Low contribution level, No tax incentive, expensive annuity products
Unsustain (negative asset), too generous benefits
Awareness of Stakeholders of DB in Social Insurance, ALM (Investment instruments: govt
bonds, deposito, stocks, property), SS Operation, Delinquencies
Early withdraw (5 year, 1 month) after termination
Lack of Awareness(among workers), expensive annuity products
Scheme Plan Main Issues
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Transformation to BPJS
Current Pension Schemes
SS Pension Projection
SJSN Pension Scheme
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Roles of Labor Union
CONTENT
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Role of SJSN Pension
Primary objective
Elderly
Vulnerable
P R O T E C T
Disable Widow/ers Children Working
Poor
A G A I N T S
Poverty (After leaving Labor force)
Secondary objective
Replace the portion of pre-retirement income
R E P L A C E
By law: Num. 40/2004
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Parents
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Minimum of Benefit: certain living standard
Plan: Defined Benefit
Retirement age : based on prevailing laws
Benefits are payable to: * Participants: - attaining retirement age - total and permanent disability * Beneficiaries: - Participant’s death
Beneficiaries: the spouse, young children and, in some cases, parents
Qualification for normal pension: Min. 15 years contribution
Contribution: shared between employer and
workers General
Provision
There should be a minimum and maximum benefit.
The benefit should be based on last salary and years of contributions
-The benefit should be sufficient to fulfill basic needs
By Law: By Law (elucidation ):
Lifetime income following exit from labor force
Formal sector only (differs from other programs)
General Provisions of Pension SJSN 11
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Transformation to BPJS
Current Pension Scheme
SS Pension Projection
SJSN Pension Scheme
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Roles of Labor Union
CONTENT
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DEPENDENCY RATIO
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POPULATION PIRAMID YEAR
FEMALE MALE
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FEMALE MALE
POPULATION PIRAMID YEAR
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Labor Projection
FORMAL SECTOR
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Labor Projection LABOR PIRAMID YEAR
FEMALE MALE
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Members Projection MEMBER PIRAMID YEAR
FEMALE MALE
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Members Projection
MEMBER OF PENSION PROGRAM BPJS PROJECTION
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Contributors vs Retirees Projection
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Financing
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Transformation to BPJS
Current Pension Schemes
SS Pension Projection
SJSN Pension Scheme
Roles of Labor Union
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Board of Trustees
Rep. of Employer (50%)
Rep. Employee (50%)
Pfund Management
Employer/Founder
Organization Structure of Employer Pension Fund
Ministry of Finance
Members
Employees
1. Doing the supervision 2. Report to the employers and members 3. Appoints Public Accounting which will do
Pension Fund financial audit 4. Appoints Actuary which will conduct
actuarial report – in case of DB scheme 5. Defines investment policy (with the
employer) – in case of DC Scheme
P E N S I O N F U N D
Tasks (Board of Trustee)
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Macro Organizational Structure
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1. Doing the study and research in relation with social security practices 2. Propose the investment policy of Social Security Fund 3. Having authorities in monitoring and evaluating the implementation of
social security
DJSN (National Social Security Board)
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B P J S
BPJS-TK Organizational Structure
Board of Trustees
Government (2)
Employer (2)
Employee (2)
Society (1)
Board of Director
President
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1. Doing the supervision for the management policy by BPJS and the performance of BOD
2. Doing the supervision for the SS Fund management
3. Giving advices and recommendation 4. Submitting supervisory report to the
President and National SS Council (DJSN)
Tasks (Board of Trustee)
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Conclusions
The enactment of the BPJS law is a significant step in the Implementation of a social protection system for all Indonesia
The current pension system is fragmented and varies by labor market groups – civil servant, the military and formal sector workers
Union will play a more important roles in the implementasi of SJSN: - Strong comprehension in the field of social security (pension, etc)
and regulations - Engagement and communication with stakeholders/policy makers
1.
2.
3.
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Thank You